Are we still innovating? Thiel and Andreessen debate!

Peter Thiel: We can do better than throwing angry birds at pigs

We live in a time when it feels like new technology is coming out faster than most of us can even keep up with. In just the last decade we have seen the fall of the desktop computer, the rise and fall of the laptop and then the rise of the smartphone.

But are we actually creating useful devices or just retreading the same ground that we sowed over a century ago?

Earlier this week, PayPal co-founder Peter Thiel and noted venture capitalist Mark Andreessen sat down for a big debate at the Milken Institute Global Conference to debate this very topic: is innovating accelerating or decelerating?

Thiel took the pro side of the argument, and Andreessen took the con position.

Here are their opening remarks (slightly edited). They're great and, not surprisingly, well said.

Thiel:

"We agree that technology is a good thing and is going to make the world a better place. And we agree that it is the critical gating factor toward taking our civilization to the nexy level in the years ahead.

I actually wonder if this sort of perspective that Mark and I have is actually a pretty odd perspective at this point. And whether we actually live in a time when most people no longer think of technology as a fundamentally good thing. And you can basically look at all the movies that Hollywood produces, and I think they almost all portrary technology that is destructive, disfunctional, kills people. Your choice is the future going to be the Matrix or Terminator or Avatar? And why not retreat into a Victorian house from the 19th century. That seems like the best you can possibly do.

I think when you reflect on why there is so much hostility to technology in our culture and in our society, one explanation I would suggest is that it has not quite been delivering the goods that is has been promising.

You have as much power in an Apple iPhone as you did as computer power that was available at the time of the Apollo missions, but what it is being used for we can debate how valuable that is. It's being used to throw Angry Birds at pigs. It is being used to throw sheep at one another. It is being used to send pictures of your cat to people halfway around the world. It is being used to check-in as the virtual mayor of a virtual nowhere, while you're riding a subway from the ninteenth century. And we may start to wonder whether perhaps technology has no quite lived up to its promise from the past.

I'm sure Mark will say that people have in the past always made fun of technology and of technological innovation and they've underestimated when it's happened. But I think it has a very different character. When people made fun of the Wright brothers, or the inventors of the automobile, they were making fun of it because it was strange and different. And today the jokes driven because it is small and trivial. In the past, the humor hid the fact that people were scared about how much technology was going to change the world. Today, the humor hides the scary fact that people are worried that there's going to be no change at all. And that we are living, in fact, in a time of general stagnation.

This is certainly reflected in very broad indicators. Wages have been stagnant in the U.S. for 40 years. 80% of the population in the U.S. thinks the next generation will be less well-off than the current generation. And, while I know you can't make a one to one mapping between macroeconomic data and technological progress, it is certainly odd that there's been a 40 year lag and the, sort of, technological cornocopia we're promised doesn't seem to filter down to most people in our society.

One of the great challenges in this debate about how much acceleration is happening involves this question of 'how do you actually measure this?' My basic claim is that every area, outside of computers, there has been deceleration since the 1970s. There's been no meaningful innovation in energy; energy prices are significantly higher after inflation than they were in 1972. We still have not recovered from the oil shocks of the 70s.

Biotechnology. We have one-third as many patents being approved by the FDA as were 20 years ago. Deceleration in biotechnology. Clean-tech has been an abysmal disaster. Transportation, not moving faster but slower, more generally.

Even things as basic as food, nanotechnology, you have the whole range of things, where not that much progress has happened.

The one big exeception to this, over the last 30 to 40 years, has been the ongoing computer revolution. And it doesn't to have been enough to really dramatically raise living standards in this country, but we can sort of hope and pray that, perhaps, this revolution will accelerate in the years ahead. And that computers alone will save us all.

Even if you measure the health of the computer industry, I think there are some things you can point to that are not as healthy as you might say. I think, by a number of measurements, the last decade saw a deceleration from the 1990s. If you look at the number of people employed in information technology broadly in the U.S., it went up 100% in the 1990s, and up another 17% in the years since 2000. So slower absolute growth, much slower percentage growth.

If you measure it in terms of market capitalizations of companies, Google and Amazon, companies created in the late 90s, are worth two to three times as much as all companies in the U.S. combined created since the year 2000. Whether you look at it from the point of view of labor, or of capital, there has been some sort of strange deceleration.

If I had to project in the next decade ahead, I think we have to at least be open to the possibilty that the computer era is also at risk of decelerating. We have a large computer rust belt, which nobody likes to talk about, but it is companies like Cisco, Dell, Hewlett Packard, Oracle, IBM, where I think the pattern will be to become commodities, no longer innovate, corresspondingly cut their labor force, and cut their profits in the decade ahead.

There are many companies that are on the cusp: Microsoft is probably close to the computer rust belt, one that's shockingly and, probably in the computer rust belt, is Apple Computers. Is an iPhone 5, where you move the phone jack from the top of the phone to the bottom of the phone, really all be screaming 'hallalujeh, it's a miracle?'

I want to underscore that I think of myself as the optimist, and Mark as the pessimest, here. And that's because we can be doing a lot better. I think we can be looking at a whole range of technologies. Futuristic computer technologies, artificial intelligence, quantum computing, space technologies, biotech, next generation life sciences. We should be finding a cure for cancer, for Altzheimer's. It is not a fact of nature that the slow downs happen; it's a cultural decision. We've become risk averse and regulated to death. We've become incrementalist and we're not willing to really take the bold steps. We've talked ourselves into thinking that throwing Angry Birds at pigs is the best we can do, and I think we can do better."

Andreessen:

"Let me start with the slogan of Peter's venture capital firm, Founder's Fund: 'We wanted flying cars, instead we got 140 characters.' I can't resist; I would like to take on both sides of the slogan.

So, flying cars are kind of representative of the technological future that was promised to us in mid-20th century science fiction, and if you were like me, like Peter, you grew up reading this stuff, it was like everybody had a flying car. Many of the innovations, interestingly, of science fiction in the mid-20th century actually have come true. Satellites, which Arthur Clarke famously forecasted. If you watch Star Trek episodes now from the 60s, they're all carrying around tablets. Even very futuristic technologies; laser surgery as an example, which was a staple of science fiction, have come true.

I find myself, though, agreeing with Bill Gates, when he was asked about Peter's statement on the flying car, he said, "Did Peter really want flying cars? Flying cars are not a very efficient way to move things from one point to another." In fact, if you were going to have flying cars, they would incredibly inefficient from a power standpoint, and they would be far more dangerous. However, even beyond that, I actually think the idea for the flying car, and the idea that transportation has stalled, I think is not quite right. I think that there are very significant changes happening in transporation right now... including advances in information technology that make transporation less necessary. Video conferencing replacing trips; ask any business person they will say it is a wonderful thing. And even within families, the ability for grandparents and grandchildren to communicate without having to drive six hours through the midwest, like I had to do when I was a kid.

That brings me to part 2 of flying cars versus 140 characters, which is, of course, a reference to Twitter. Twitter, of course, makes an easy target because a lot of Twitter is, in fact, about what your cat had for breakfast. And lunch. And dinner. And snacks in between. But I think the statement 'is 140 characters the best we were able to do/' actually trivializes what's happened to technology and it trivializes Twitter. And, so, I will rise to Twitter's defense.

Twitter is instant public global messaging for free. If you think about the impact of that, if you go back into any previous era, the era of telegraphs, the era of telephones, the era of television, and you tell that instead of having the communication technologies you have at the time, I can give you instant public global messaging for free, they would have thought you delivered it straight from heaven, like its the most astonishing communications breakthrough they could have possibly imagined. And we actually have it, and it actually works, and its growing at an astonishing pace and I think everybody's going to be on and I think it's a really big deal.

I think it's a really big deal for business, I think it's a really big deal for news (I think every reporter in the room would agree with that), I think it's a really big deal for politics, and I think it's also actually a really big deal for cultural discovery, which is new online media, like Twitter and Facebook, make it easier for people to meet people who are not like themselves, and make it easier for people to meet people from other countries and other cultures and interact with them. And a lot of the experiences for kids today is interacting with people from other countries at a very early age, in a way that people, at least from my generation, never did. So I think it's a very, ver big deal across those dimensions.

More generally, I would certainly assert the central role that information technology is going to play in our civilization advancing. In particular communication technology. Like Twitter, communication technology if often disregarded, or trivialized, as 'people talk to each other about all kinds nonsense, why does it matter?' The whole basis of our civilization, in my view, is communication. Without communication, we'd all be sitting in caves, by ourselves, unable to do things, unable to learn about things, unable to form into groups. And the ability for people to be able to communicate, and being able to have communication costs come down the curve as aggrevisely as they are, I think is very big potential setup, and platform, for what happens over the next 20 or 30 years.

In particular, I think communication will be the catalyst for a lot of innovations in a lot of other industries. Communication is the platform on top of which a lot of innovation is happening. By letting innovators communicate with each other, by letting innovators collaborate, by letting innovators team and combine expertise and information, much more fluidly than they used to be able to.

Let me end on a comment on perspective; Peter addressed this briefly. In history, the great innovations in the past are now well understood as being very, very important. It's very obvious. In almost every case, they were not widely understood as such at the time. In fact, I would assert that they were often actually viewed as trivialities or jokes. I don't think that this is a new phenomenon, to be this dismissive about new technologies early.

Let me give three quick examples:

The telephone. When Thomas Edison was first working on the telephone, the assumption of the use case on his early work on the telephone was the idea that telegraph operators needed to be able to talk to each other. It was considered to implausible that you would have a system that would let any ordinary person pick up the telephone and talk to another ordinary person, like that was clearly implausible, that was clearly not going to happen. But you had all these telegraph operators scattered throughout the world, and you had all these coordination problems between telegraph operators as they sent messages to each other and they said, 'Boy, if we could actually let the telegraph operators talk to each other, that would make the telegraph work a lot better,' completely missing the larger opportunity.

The Internet. It's hard to remember, but the Internet was laughed at. It was heaped with scorn from 1993 to 1997/1998. In fact, those of you who were in the industry at that time will remember that the New York Times had a reporter on staff named Peter Lewis. I'm convinced he was hired by the editors to just write negative stories about the Internet. It was all he did. And it always, 'the Internet is never going to be a consumer medium, the Internet is not nearly as big as these people think, nobody ever going to trust the Internet for e-commerce.' It was literally like every week there was a negative story in the Times about the Internet. which gives me some pleasure today, watching the New York Times try to cope with the consequences of the technology that they laughed at.

My final example is the car. The car was absolutely viewed as a triviality and a toy when it first emerged. In fact, J.P. Morgan himself refused to invest in Ford Motor Company, with the response that its 'just a toy for rich people,' which is in fact what it was at the time. If you had one of the first cars, you had to be a rich person, which means you also had to have a driver, unless you were a very advanced rich person. You also had to have a stoker with the early cars to keep the engine going, and then you also had to travel with a full-time mechanic cause the thing would break down every three miles. So there were a lot of reasons to doubt the importance of the car.

My favorite example of skeptisicm about the car and, in fact, cultural rejection of the car, there were a series of laws passed in the late 1800s in the U.K., and also in the U.S., called the Red Flag laws at the time. So the U.K. Red Flag law worked as follows: firstly, at least three persons shall be employed to drive any automobile. Which is actually not that crazy since it was already assumed that you had your driver and your mechanic with you. Secondly, one of such persons, while the automobile is in motion, shall proceed such automobile on foot by not less than 60 yards. And shall carry a red flag, constantly displayed, and shall warn the riders and drivers of horse at the approaching of such automobiles. And shall signal the driver thereof when it is necessary to stop. So possiblily a bit of protectionism on the part of the blacksmith guild, but also a good sign of the times in terms of the initial shock and initial rejection of the idea.

It turns out, that's not even the really entertaining one. Pennsylvania in 1896, legislators unanimously passed a bill through both houses of the state legislature which would require all motorists, piloting their horseless carriages, upon chance encounters with riders on horseback or cattle to, number one, immediately stop the vehicle, number two, immediately, and as rapidly as possible dissemble the automobile, and, number three, conceal the various components out of sigh behind nearby bushes, until equestrian or livestock is sufficiently passified.

The point is, the great innovations of the present, I believe, are virtually guaranteed to be viewed as trivial, and viewed as jokes. I think history 50 or 100 years from now will enshroud them in legend. In our time they won't be recognized as such. Of course, in the future, when they become legends, our descendants themselves will have their own trivial innovations to laugh at."